Russia increases gas supplies to China

Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, commented to Rossiyskaya Gazeta on the prospects of the Power of Siberia 2 project and, in general, the eastern vector in Russia's oil and gas exports.

The agreements on increasing supplies via the Power of Siberia gas pipeline and the Far Eastern Route project underline China's growing interest in Russian pipeline gas, Alexey Belogoryev noted.

"This is due to the geopolitical background, due to the fact that China has reassessed its risks regarding the reliability of various goods supplies by sea, including LNG. Therefore, China needs an increase in imports via the Power of Siberia and the Far Eastern Route, as well as the Power of Siberia-2 gas pipeline, to create a kind of logistical base in case of serious geopolitical cataclysms," the expert believes.

However, despite the fact that the signed memorandum can be called a breakthrough, it does not fully guarantee that a commercial contract for the gas sale will be signed in the next year or two and construction will begin, Alexey Belogoryev warns.

"The chances of implementing this project have increased significantly, but they are not yet one hundred percent," he said.

The key issues, according to the expert, remain the price at which natural gas will be sold and the actual volume of supplies. This is important from the point of view of the project profitability, which will require large capital expenditures.